With an aim to discourage cash transactions, the Cabinet on Wednesday approved withdrawal of surcharge, service charge and convenience fee on card and digital payments.

The Cabinet has approved withdrawal of surcharge, service charge and convenience fee on card and digital payments.(Picture courtesy: Shutterstock)

The cabinet chaired by Prime Minister Narendra Modi has approved the introduction of measures to promote electronic payments through plastic money and digital means.

These include the withdrawal of surcharge, service charge and convenience fee on card or digital payments currently imposed by various gover nment departments and organisations.

The government will also rationalise the merchant discount rate (MDR) — the fee charged by a bank for providing debit and credit card services. Payments beyond a prescribed threshold may be mandated to be made only through plastic money or digital mode.

Electronic payments will help reduce tax avoidance and circulation of black money.

The measures would be implemented in the next two years, and the short-term ones within the next year.